Transfix raises $42 million from investors

Logistics technology startup Transfix has raised another $42 million in funding from the
venture capital firm New Enterprise Associates (NEA) and other partners, bringing it to
nearly $79 million in capital being funneled into its startup online truckload marketplace.

The third and latest round, announced Wednesday, also included such investors as Canvas
Ventures and Lerer Hippeau Ventures. The size of the three funding rounds is unusually large
for a relatively new broker that does not have the cache of a company like Uber Technologies Inc.,
according to several observers. New York-based Transfix would not comment on its profitability, or
even say if it is profitable. Nor would it disclose customer names. It said its customers are
primarily in the retail, food and beverage, and manufacturing industries.

In an interview, Drew McElroy, Transfix's founder and CEO, acknowledged the young startup
was fighting for market share in the crowded "Uber for trucking" segment. "Yes, there are other
rivals in this area, and we keep an eye on Uber, Amazon, and a handful of other startups, but we
believe our solution is more robust and comprehensive," he said.

McElroy argued that Transfix's solution is more comprehensive than rival startups
pitching online freight marketplaces because it handles a wider variety of loads.

"Our solution is more comprehensive, so there's more value to be wrung out of the industry because
we have visibility over the entire truckload supply chain, not just the part that we broker," McElroy said.
"The more data and more scale you have, the more you can mine that data and understand what's really
going on, and find the inefficiencies."

Transfix says its on-demand freight marketplace eliminates waste in the supply chain through
mobile technology, machine learning, and big data analytics. Shippers can use the platform to
speed the delivery of their goods while lowering costs through features like real-time
visibility and exception management, Transfix said. In March,
the company introduced online load booking and rate-negotiation capabilities for carriers into its suite of
digital logistics services for the truckload freight sector.

Chevy Chase, Md.-based NEA has been investing large sums in logistics startups in recent months,
including a $50 million investment
in business intelligence software provider Aera Technology
(formerly known as FusionOps) in June. NEA has also backed ClearMetal Inc., a provider of
predictive intelligence tools for container shipping firms, and Upskill (formerly APX Labs),
a vendor of enterprise software for industrial augmented reality (AR) wearables.

"Long-haul trucking and logistics make up almost 1 percent of the U.S. economy," Scott Sandell,
managing general partner at NEA, said in a statement. "At the same time, this industry remains
incredibly fragmented and opaque and has not yet enjoyed the benefits of technology and innovation
like most other industries. Transfix is poised to change all that, providing better transparency
and visibility to shippers and truckers alike."

Investors are willing to continue handing money to small startup firms because of the potential
for a big profit if they back the right company, one industry expert said.

"Disruption in supply chain management is a massive opportunity, and the number of new entrants
into the space underscores the size of that opportunity," Conor Moore, national co-leader of
consultancy KPMG's Venture Capital Practice, said in an email. "There is an initial 'land grab'
of sorts with a bunch of new companies getting funding. Over time, some of these companies fail,
and the stronger survive. As such, a profitable model today is not as important as the size
of the total addressable market."

That strategy is particularly true for the supply chain, where change has happened at a
relatively slow pace compared to other sectors, he said. "Supply chain disruption is in its
infancy as opposed to some other industries. In today's changed world of physical product
delivery, the ability for technology to cause that disruption is greater than it ever has
been," Moore said.

The flood of venture capital funds to logistics technology startups is part of a larger
trend of a major uptick in the amount of money invested by venture capitalists during the
second quarter of 2017 despite an ongoing decline in the number of deals completed globally,
according to KPMG. In the U.S. alone, venture capital-backed companies raised $21.8 billion
across 1,963 deals during the second quarter, the firm reported in its quarterly investment
report,
"KPMG Venture Pulse Q2 2017."

That trend is expected to continue in the third quarter, with a focus on familiar logistics
technology terms like artificial intelligence (AI), analytics, autonomous vehicles, and blockchain,
according to the KPMG report. "AI is expected to become a very hot sector for investment in the U.S.
over the next 12 months, with technologies that enable machines, computers, or platforms to make
decisions at a significantly quicker pace than humans," the KPMG report said.

About the Author

Ben AmesSenior Editor
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.More articles by Ben Ames

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